Newly formed Lola Energy is ready to start spending money on Marcellus and Utica shale gas operations despite the low prices and supply glut that have prompted budget cuts and layoffs by more established producers.
The Pine-based company, founded last month by four former EQT Corp. executives, announced Tuesday it received a $250 million commitment from private equity firm Denham Capital.
Lola will look for opportunities to buy wells or acreage from struggling producers, or to drill fresh wells on land where other companies’ leases have expired, said CEO Jim Crockard. The start of production will be “asset dependent. It could be next summer if we buy something or 18 months,” he said.
The company will focus on the Marcellus and deeper Utica in what has become a core area of drilling in southwestern Pennsylvania, eastern Ohio and northern West Virginia, said Crockard, a Greene County native who left EQT in 2014 after 14 years at the state’s fifth biggest shale gas producer.
Record production from the Marcellus outpaced pipeline building and demand, creating a glut that has pushed prices to half what they were a year ago. Companies responded by reducing the number of wells drilled in Pennsylvania by 40 percent, slashing their capital budgets, closing offices and laying off workers.
“The prices spooked all of us,” Crockard said about early discussions among him and fellow firm principals Richard Hill, Lindell Bridges and Dave Bradley. “We had to ask, ‘Is this something that will make sense?'”
He said the technical know-how that his team of former EQT leaders brings will allow Lola to drill and produce cheaply, and that the company won’t carry the heavy debt load that is holding back competitors.
“We think we’ll weather through it just fine,” Crockard said.
This article was written by DAVID CONTI from The Pittsburgh Tribune-Review and was legally licensed through the NewsCred publisher network.